Holding

The suit is entertainable by the District Court; Article 131 does not apply.

Summary

The State of Rajasthan, through its District Rehabilitation Officer, sued the Union of India and the Railway Administration in a district court for damages to tents damaged while in transit on Indian Railways. The Union contended that the suit was barred by Article 131 of the Constitution, which gives the Supreme Court exclusive jurisdiction over disputes between a State and the Union. The district judge held he had jurisdiction; the High Court affirmed, and a special leave petition was filed before the Supreme Court. The Court held that Article 131 applies only to disputes arising from the constitutional relationship between the Union and a State, not to ordinary commercial claims under statutes. Since the claim was based on Section 80 of the Indian Railways Act, 1890—a statutory dispute between the plaintiff and the Railway Administration—the suit could be tried in the district court. Consequently, the special leave petition was dismissed.

Issues considered

Whether a suit filed by a State against the Union for compensation for damaged goods transported by rail is maintainable in a civil court or must be brought under Article 131 before the Supreme Court.
Whether Article 131 confers exclusive jurisdiction over such a dispute.
Whether the dispute falls within the scope of Article 131 of the Constitution.

Legislation cited

Constitution of Indias. 131, s. 298, s. 299, s. 300
Indian Railways Act, 1890s. 80

Subjects

Article 131Supreme Court jurisdictionUnion‑State disputeIndian Railways ActSection 80civil suitcommercial contractconstitutional laworiginal jurisdictionspecial leave petition

Judgment

700

A

UNION OF INDIA

v.
B
STATE OF RAJASTHAN

September 4, 1984

[0. CHINNAPPA REDDY, A.P. SEN & E.S. VENKATARAMIAH, JJ.]
c
C1J11stltution of India-Artical 131-0riginal jurisdf,;tion ofthe Supreme
Court-Scope of-Jurisdiction when attracted. Held: attracted only when dispute
arises between or amongst the States and the Union of India in the context of the
constitutional relationship that exists between them and the powers, ri'ghts, duties,
fmmunities, liabilities, disabilities, etc., flowing therefrom. Whethef a suit filed
D by the State against the Union of India for recovery of compensation for loss on •
account of da1nage caused to goods despatched through the b1dfan Railways could
be filed in a civil court-Whether suit Maintainable. Held: yes.

Indian Railways Act, 1890-Section 80-Suit filed under section 80 is one
b~tween Railway Administration and the person instituting the suit even though
Union of India is impleaded as a party.
E
The respondent, State of Rajasthan through its District Rehabilitation
Officer, Barmer filed a suit in the court of the District Judge, Balotra against
the appellant, Union of India, and the Railway Adrr1inistration claiming
damages for the loss suffered by it on account of the damage caused to the
goods transported by rail through the Railway Administration. The appellant '
contended that the suit was not maintainable in the District Court in view of
F Article 131 of the Constitution which, according to it conferred exclusive
jurisdiction on the Supreme Court to decide all disputes arhing b_etween a State
and the Union. The District Judge held that he hadjurisdii;tion to try the suit.
A Revision Petition filed against the order of the District Judge was dis1nissed
by the High Court. Hence this petition for special leave to appeal.

G
Dismissing the petition,

HELD : The suit was entertainable by the District Court.
..
On a careful consideration of the whole matter in the light of the decisions
of this Court, it is felt that Article 131 of the Constitution is attracted only when
a dispute arises between or amongst lthe States and the Union in the context of
the constitutional relationship that exists between them and the powers, rights,
• '··.
duties. immunities, liabilities, disabilities etc. flowing the[efrom. Any dispute
- UNION V. RAJASTHAN

which may arise between a State in the capacity of an employer in a factory, a
701

A
manufacturer of goods subject to exercise duty, a holder of a permit to run a
stage carriage, a trader or businessman carrying on business not incidental to
• the ordinary functions of Government, a consumer of railway services. etc. like
any other private party on the one hand and the Union of India on the other
Cannot be construed as a dispute arising between the State and the Union in
discharge of their respective executive powers attracting Article 131 of the
Constitution. It could never have been the intention of the framers of the ll
• Constitution that any ordinary dispute of this nature would have to be decided
exclusi•ely by the Supreme Court. [708G·H ; 709A-BJ

State of Bihar v. Union of India & Anr., [1970] 2 S.C.R. 522, Union of
India y, State of Mysore, [1977] S.C.R. 842. Stale of Mysore v. Union of India
& Ors. · A.I.R. 1968 Mysore 237 at pages 239-240, State of Rajasthan & Ors.,
etc. v. Union of India etc. etc., [1978J l S.C.R. 1. State of Karnataka v. Union of c
, India & Anr., !1978] 2 S.C.R. l at page 92 and The Framing of India's Constitu-
tion-A Study by Shri B. Shiva Rao at page 483, referred to.

In the instant case, the State Government has made a claim like any
other consignee of goods despatched through the railway for compensation and
its success or failure in the suit depends on proof of facts which have to be
established in the same way in which a private person would have to establish. D
This is not even a case where a forrn:il contract is entered into between the
Union of India and the State of Rajasthan in _accordance with the requirements
of Article 299 of the Constitutlon. It is just a commercial contract under which
an officer of the State of Rajas than was entitled to claim delivery of the goods
ll consigned as any ordinary consignee. The claim involved in this case is one
based on section 80 of the Indian Railways Act, 1890; Section 80 of the Indian
Railways Act, 1890 indicates that the claim made under it is essentially against
the Railway Administration concerned. The Union of India is impleaded as a
party to suits instituted thereunder being the owner of the Indian Railways by
• virtue of Article 300 of the Constitution. The statute, however, treats the dispute
as one between the Railway Administration concerned and the person insti·
tuting the suit. Neither of the parties to these proceedings is questioning the
applicability of the provisions of the Indian Railways Act, 1890 to these procee.
F
dings. It is, therefore, difficult to hold that in these proceedings there is any
question which falls within the scope of Article 131 of the Constitution. ·
[709H ; 710A-B ; D ; H ; 711A-B]

CIVIL APPELLATE JURiSDICTION : Special Leave Petition (Civil)
No. 284 OF 1982. G

From the Judgment and Order dated the 2nd September
1981 of the Rajasthan High Court in Civil Revision Petition No.
• 273 of 1981

K.G. Bhagat, Addi. Sol General, Miss A. Suhhashini and Vijay
Panjwani for the Petitioners. ff
A
702 SUPll.EME COURT REPORTS

The Judgment of the Court was delivered by
(1985] 1 S.C.R.
-
VeNKATARAMIAH, J. The precise question which arises for con-
sideration in this petition is whether a suit filed by the State of
Rajasthan against the Union of India for recovery of compensation
•
for loss on account of the damage caused to the goods despatched
B through the Indian Railways in a civil court at Rajasthan is main-
tainable or whether it should be filed in this Court under Article
131 of the Constitution.
•

The facts of the case are these. The District Administrator
of Barmer in Rajasthan was in need of a certain number of tents
c and their accessories and at his request 170 bundles of tents and
their accessories were despatched by Chief Commandant, Mana '
Shivir (Raipur) Madhya Pradesh to the Collector, Barmer through
the Indian Railways under R.R. No. 423978 dated February
17, 1972 to be delivered at Barmer. No intimation was received
D about the arrival of the consignment at Barme:r till August 6,1972.
On hearing that the consignment had reached Barmer on August
6, 1972, the Additional Collector and the District Rehabilitation
Officer went to Barmer on August 6, 1972 for taking delivery but
it was found that the packings of the goods had been seriously

E
damaged and as a consequence thereof the tents as well a• the
accessories had become unfit for use. The delivery was not, there-
"
fore, taken and a request was u.ade for assessing the damages. The
goods were auctioned and a sum of Rs. 15,000 was fetched in the
auction. Since the claim of the consignee was not settled by the •
Railway Administration, after issuing necessary notice to the
General Manager, Northern Railway, New Delhi, a suit was filed
F by the State of Rajasthan through the District Rehabilitation Officer
Barmer claiming damages amounting to Rs. I, 57,825.80 against
the Union oflndia in the Court of the District Judge, Balotra on
July 23,1977. The suit was contested by the Union of India and
the Railway Administration on various grounds and one of them
was that the suit was not maintainable in tbe District Court in view
G of Article 131 of the Constitution which according to them conferred
exclusive jurisdiction on the Supreme Court to decide all disputes
arising between a State and the Union. The 6th issue framed in the
suit related to the competence of the District Court to entertain
the said suit. The above issue was heard as a preliminary issue and
•
the District Judge held by his order dated April 16, 1981 that he
ff
UNION v. RAJASTHAN (Venkataramiah, J.) 703
had jurisdiction to try the suit. Against the order of tlae Bistrict
Judge a revision petition was filed before the High Court of A
Rajasthan and that petition came '.to be dismissed on September
2,1981. This petition for Special Leave is preferred under Article
136 of the Constitution against the order of the High Court.

After the case was heard foe some time, the learned Additional
Solicitor General very fairly stated that the. suit could be allowed to B
be proceeded with before the District Court. Since the question
was of importance and that every suit instituted by any State
Government against the Railway Administration may give rise to a
similar issue, we propose to dispose of this Special Leave Petition
with our reasons.

• Article 131 of the Constitution reads thus : G
"131. Subject to the provisions of this Constitution, the
Supreme Court shall, to the exclusion of any other court
have original jurisdiction in any dispute-

(a) between the Government of India one or more · D
States ; or

(b) between the Government of India and any State
or States on one side and one or more other States on the
other; or
E
(c) between two or more States ifand in so far as the
dispute involves any question (whether of law or fact) on
which the existence or extent of a legal right depends :

Provided that the said jurisdiction Shall not extend to
a dispute arising out of any treaty, agreement, covenant, F
engagement, sanad or other similar instrument which, hav·
/
ing been entered into or executed before the commen-
cement of this Constitution, continues in operation after
. Jr such commencement, or which provides that the said
jurisdiction shall not extened to such a dispute."
G
The provision corresponding to Article 131 of the Constitution
in the Government of India Act, 1935 was section 204 of that Act.
That section prior to its amendment by the India (Provisional
Constitution) Order, 1947, read as : H
704 SUPREME COURT REPORTS [1985] 1 S.C.R.

A "204. Original jurisdiction cf Federal Court. (I) Subject
to the provisions of this Act, the Federal Court shall to
the e~clusion of any other court, have an original jurisdic-
tion in any dispute between any two or more of the follow-
ing parties, that is to say, the Federation, any of the pro-
'
vinces or any of the Federated States, if and in so far as
B the dispute involves any question (whether of law or fact)
on which the existence or extent of a legal right depends :

Provided that the said jurisdiction shall not extend
to-

(a) a dispute to which a State is a party, unless the
Cl
dispute-
•
(i) concerns the interpretation of this Act or of an
Order in Council made thereunder, or the extent
of the legislative or executive authority vested in
D the Federation by virtue of the Instrument of
Accession of that State ; or

(ii) arises under an agreement made under Part VI
of this Act in relation to the administration in
that States of a law of the Federal Legislature, or
otherwise concerns some matter with respect to
•
F
which the Federal Legisbture has power to make
laws for that State ; or

(iii) arises under an agreement made after the establish-
ment of the Federation, with the approval of His
F Majesty's Rep, esentative for the exercise of the
functions of the Crown in its relations with
Indian States, between that State and the Federa-
tion or a Province, being an agreement which
expressly provides that the said jurisdiction shall
extend to such a dispute,
G
(b) a dispute arising under any agreement which ex-
pressly provides that the said jurisdiction shall not extend
to such a dispute.

(2) The Federal Court in the exercise of its original
jurisdiction shall not pronounce any judgment other than a
H declaratory judgment."
UNION v. RAJASTHAN (Venkataramiah, J.) 705

It may be noted that while the main part of sub-section (I) of A
section 204 of the Government of India Act, 1935 is more or less
similar to Article 131 of the Constitution, there is a difference bet-
' ween the structure of the proviso to Article 131 and the structure
of the proviso to section 204 (I). Article 131 of the Constitution
provides that subject to the provisions of the Constitution, the
Supreme Court shall to the exclusion of any other Court, have B
original jurisdiction in any dispute-Ca) between the Government
of India and one or more States; or (b) between the Government
of India and any State or States on one side and one or more other
States on the other ; or (c) between two or more States, if and in so
far as the dispute involves any question (whether of law or fact) on
which the existence or extent of a legal right depends. Tha !means that c
• if there is any dispute involving any question about the existence of
a legal right or even where the existence of legal right is admitted if
there is a dispute about its scope between or amongst the States
and the Government of India as stated therein, the Supreme Court
>
would have exclusive jurisdiction to decide the question whether of
law or fact. No other court has jurisdiction to deal with it. D
Similarly under section 204 of the Government of India Act, 1935
the Federal Court had exclusive jurisdiction to decide similar
questions which arose between or amongst the Federation, any of
• the Provinces "or any of the Federated States. Under the proviso
to that section, however, it was provided that the said jurisdiction
would not extend to dispute to which a State (a Federated State) E
was a party, unless the dispute concerned matters mentioned in
clauses (i) to (iii) thereof. Under the proviso to Article 131 of the
' Constitution the original jurisdiction of the Supreme Court does
not extend to matters referred to therein. In the State of Bihar v.
Union of India & Anr.(1) after reviewing the consititutional history
which led to the enactment of Article 131 of the Constitution, a F
• Constitution Bench of this Court observed at pages 529-530 thus :

"Although Art. 131 does not define the scope of
the disputes which this Court may be called upon
to determine in the same way as section 204 of the G
Government of India Act, and we do not find it necessary
to do so, this much is certain that the legal right cwhieh is
' the subject of disput• must arise in the context of the Consti-

(I) f1970] 2 S.C.R. 522. H
706 SUPREME COURT REPORTS (1985] 1 S.C.R.

A tution and the Federation it sets up. However, there can be
no doubt that so far as the parties to the dispute arc con-
cerned, the framers of the Constitution did intend that they
could only be the constituent units of the Union of India
and the Government of India itself arrayed on one side or
'
the other either singly or jointly with another unit or the
B Government of India." (Underlining by us)

The Constitution· Bench ultimately held in the above case that
•
if a private person, firm or corporation was also impleaded as a 1
party the dispute could not be tried by the Supreme Court under
Article 131 of the Constitution.
c
In Union of India v. State of Mysore,( 1) the question was whether
a writ petition filed in the High Court by a State against the Union of
India questioning the correctness of the order of the Central Govern-
ment passed on a revision petition filed under the Central Excises
and Salt Act, 1944 rejecting the contention of the State Government
D against the levy of excise duty on goods in stock with the state's
Implements Factory was maintainable. The High Court held that the
Central Government being a Tribunal as such while disposing of the
revision petition in the exercise of power conferred on it by Section
36 of the Central Excises and Salt Act, 1944 could not be a dispu-
tant in the dispute it decided. The Central Government was only .
E interested in the recovery of duty which was properly payable but
that by itself did not transform it from a Tribunal Into a disputant.
The High Court observed that:
•
••
"A dispute falls within Article 131 of the Constitution only
when the Central Government is a disputant as such. The
F dispute must directly arise between the State and the
Central Government as the repository of the executive
power of the Union. An indirect interest in the collection
of the revenue in the form of excise duty if the excise duty
demanded by the Central Excise is exigible, is far too
slender a foundation for the postulate that in every contro- -~. 4
G
versy arising under the provisions of the Central Excise Act
the Central Government is necessarily a disputant. The
acceptance of such interpretation would make the Central
Government a party to every proceeding under the Central

ff (!). [19771 I S.C,R. 842.
UNION v. RAIASTHAN (Venkataramiah, J.) 707

Excise Act in the role of a disputant, and, that consequence A
can scarcely fit into its constitution as a tribunal under
section 36 of the Act." (Vide State of Mysore. v. Union of
india & Ors.) (1)

Accordingly the contention raised by the Union of India was
negatived by the High Court. This Court affirmed the above view of
the High Court in the case of Union of India v. State of Mysore B
(supra) at page 845 thus:

"Mr. Raman tried to argue that the High Court erred in not
applying article 131 of the Constitution to the controversy
even though the writ petition was barred thereunder as it
• fell exclusively within the jurisdiction of this Court under c
article 131 of the Constitution as a dispute between the
Government of India and the State of Mysore. The argu-
ment is however futile because there is nothing on the
record to show that there was any such dispute between the
Central and the State Government. As the High Court has
0
pointed out, the Union of India was made a party to the
writ petition merely because it had dismissed the revision
application of the State Government."
• Jn State of Rajasthan & Ors. etc. etc. v. •union of India etc.
etc.(2 ) while explaining the scope of Article 131 of the Constitution
Chandrachud, J. (as he then was) said at page 54: E

"The dispute between the Union of India and a State can-
not but be a dispute which arises out of the differences
between the Government in office at the Centre and the
Government in office in the State. 'In office' means 'in F
.. power' but the use of the latter expression may prudently be
avoided with the realization of what goes with power. But
there is a further prerequisite which narrows down the
ambit of the class of dispute which fall wihtin Art. 131.
That requirement is that the dispute must involve a G
question whether of law or fact, on which the existence or
extent of a legal right depends. It is this qualification which
affords the true guide for detremining whether a particular
•
(I). A. I. R. 1968 Mysore 237 at pages 239-240.
(2) [19781 I S.C.R. I. n
108 SUPREME COIJRT REPORTS (1985) 1 S.C.R.

A dispute is comprehended with art. 13J. ........ The purpose
of art. 131 is to afford a forum for the resolution of disputes
which depend for their decision on the existence or extent
of a legal right."
'
In State of Karnataka v. Union of India & Anr.(1 ) Beg C.J. Stated
8 as under:

"It has to be remembered that Article 131 is traceable to
section 204 of the Government of!ndia Act. The jurisdiction
conferred by it thus originated in what was part of the fede-
ral structure set up by the Government of India Act, 1935.
c It is a remnant of the Federalism found in that Act. It
. should, therefore, be widely and generously interpreted for ,,
that reason too so as to advance the intended remedy. It
can be invoked, in my opinion, whenever a State and other
States or the Union differ on a question of interpretation of
the Constitution so that a decision of it will affect the scope
D or exercise of governmental powers which are attributes of
a State. It makes no difference to the maintainability of the
action if the powers of the State, which are Executive,
Legislative and Judicial, are exercised through particular
individuals as they necessarily must be. lt is true that a
criminal act 'Committed by a Minister is no part of his
E
official duties. But, if any of the organs of the State claim
exclusive power to take cognizance of it, the state, such,
becomes interested in the dispute about the legal
competence or extent of powers of one of its organs which '
may emerge."

On a careful consideration of the whole matter in the light of
F the decisions of this Court referred to above, we feel that Article 131
of the Constitution is attracted only when a dispute arises
between or amongst the States. and the Union in the context of
the constitutional relationship that exists between them and
the powers, rights, duties, immunities, liabilities, disabilities
etc. flowing therefrom. Any dispute which may arise between a
G State in the capacity of an employer in a factory, a manufacturer of
goods subject to excise duty, a holder of a permit to run a stage
carriage, a trader or businessman carrying on business not incidental •
H (I) [1978) 2 S.C.R. J. at p. 92.
UNION'.•· RAJASTHAN (Venkataramiah, J.) 709

to the ordinary functions of Government, a consumer of railway
services etc. like any other private party on the one hand and the A
Union of India on the other cannot be construed as a dispute arising
between the State and the Union in discharge of their respective
executive powers attracting Article 131 of the Constitution. It could
never have been the intention of the framers of the Constitution
that any ordinary dispute of this nature would have to be decided B
exclusively by the Supreme Court. It is well to remember that the
' constitutional proposals of the Sapru Committee advocated the
strengthening of the position of the. Federal Court in India and
' widening its jurisdiction on the original side so that the Federal
Court could act as an interpreter and guardian of the Constitution
and as a tribunal for the determination of the disputes between the
constituent units of the Federation. The Joint Committee on Indian
• Constitutional Reforms was also of opinion that the object of con-
ferring exclusive original jurisdiction on the Federal Court was that
the disputes of the kind specified between the Federation and the
Provinces as the constituent units of the Federation should not be
' left to be decided by courts of law of a particular unit but be adjudi- D
cated upon only by the highest tribunal in the land which would be
beyond the influence of any one constituent unit. The Special
Committee consisting of Sriyuts S. Varadachariar, Aliadi Krishna-
swami Ayyar, B.L. Mitter. K.M. Munshi and B.N. Rau appointed by
!'
the constituent Assembly to consider and report on the constitution E
and powers of the Supreme Court suggested 'that the Supreme
Court, like the Federal Court under the 1935 constitution, would
L
be the best available forum for the adjudication of all disputes
• between the Union and a unit and between one unit and another and
proposed that the court should have an exclusive original jurisdiction
in such disputes'. (Vide The Framing of India's Constitution-A F
Study by Shri B. Shiva Rao at p. 483)._ Considered in the light of the
• foregoing the conclusion becomes inevitable that disputes of the
nature involved in this case could not have been in the contempla-
tion of the framers of the constitution when they adopted Article 131
of the Constitution.
In the instant case the legal right of the State of Rajasthan to G
sue for damages for the loss suffered by it on account of the damage
caused to the goods transported through the Railway Administration
as such is not in dispute between the Union Government and like
• State of Rajasthan. The State Government has made a claim the
any other consignee of good£ despatched through the railway for
H
110 SUPREME couin REPORTS [198Sj 1 s.c.R..
compensation and its success or failure in the suit depends on proof
A of facts which have to be established in the same way in which a
private person would have to establish. This is not even a case
where a formal contract is entered into between the Union of India
and the State of Rajasthan in accordance with the requirements of '
Article 299 of the Constitution. Jt is just a commercial contract
B under which an officer of the State of Rajasthan was entitled to
claim delivery of the goods consigned as any ordinary consignee. It
may be noticed that the jurisdiction of the Supreme Court under
Article 131 of the Constitution is subject to the other provisions of
the Constitution. Under Article 298 of the Constitution the execu-
tive power of the Union and of each State extends to the carrying
c on of any trade or business and to the acquisition, holding and
disposal of property and the making of contracts for any purpose. i'
That Article further provides that the said executive power of the
Union shall, in so far such trade or business or such purpose is
not one with respect to which Parliament may make laws, be subject
in each State to legislation by the State and said executive power •
D of each State shall, in so far as such trade or business or such pur·
pose is not one with respect to which the State Legislature may
make laws, be subject to legislation by Parliament. The claim
involved in this case is one based 011 section 80 of the Indian Rail·
ways Act 1890. Under that section a suit for compensation for loss of
E
life of, damage, deterioration or non-delivery of animals or goods •
may be instituted if the passenger was or the animals or goods
were booked from one station to another on the railway of the same
Railway Administration against that Railway Administration and if
the passenger was or the animals of goods were booked through '
over the railways of two or more railway administrations against the
F Railway Administration from which the passenger obtained his pass
or purchased his ticket or to which the animals or goods were
delivered for carriage, as·: the case may be, or against the railway
administration on whose railway the destination station lies, or the
Joss, injury, destruction or damage or deterioration occurred and in
either case the suit may be instituted in a court having jurisdiction
G over the place at which the passenger obtained his pass or purchased ••
his ticket or the animals or goods were delivered for carriage, as
the case may be, or over the place in which the destination station
lies or the Joss, injury, destruction, damage or deterioration occurred
Section 80 of the Indian Railways Act 1890 indicates that the claim •
made under it is essentially against the Railway Administration
concerned. The Union of Indian is impleaded as a party to suits
H instituted thereunder being the owner of the Indian Railways by
IJNloN v. RAiASTiiAN (Venkaiaramlah, J.) 111
virtue of Article 300 of the Constitution. The statute, however, treats
A
the dispute as one between the Railway Administration concerned
and the person instituting the suit. Neither of the parties to these
proceeding; is questioning the applicability of the provisions of
the Indian Railways Act, 1890 to these proceedings. It is, there-
fore, dfficult to hold that in these proceedings is any question
B
which falls within the scope of Article 131 of the Constitution.
' The High Court and the District Judge were, therefore,
right in holding that the snit was entertainable by the District
Court.
c
For the foregoing reasons, this Special Leave Petition fails and
hereby dismissed.
D

H.S.K. Petition dismissed.

•